The total amount of international sovereign debt producing negative yields is astronomical, says a new report from Fitch Ratings (via the Wall Street Journal). The analysis discovered that there’s more than $10 trillion of negative-yielding debt.
According to the report, which was released Thursday, found that 14 nations have $10.4 trillion in sovereign negative-yielding debt as of May 31. This is up five percent from $9.9 trillion on April 25.
Of the total amount of debt, $7.3 trillion was long-term debt and $3.1 trillion was short-term debt. And Japan is the biggest culprit of this type of debt.
This comes as more central banks are implementing unconventional monetary policy directives, including subzero interest rates – a handful of central banks have adopted this policy, such as the Bank of Japan, the European Central Bank and the Swiss National Bank.
The United States is benefiting from this as more global investors are diving head first into U.S. Treasurys. Because U.S. Treasurys produce positive yields, there is a growing demand for the greenback.
Leave a Comment